Qarase had planned to raise taxes on all goods and services by 2.5 per cent.

The increase, scheduled to take effect on New Year's Day 2007, was especially unpopular among low-income earners, as it would have boosted prices of groceries and other staples.

The military has also confirmed it would go ahead with a 2 per cent wage rise for Fiji's more than 20,000 public servants.

Since the December 5 coup, Commodore Frank Bainimarama, the military commander who led the coup, has sought to assure Fijians and potential tourists that his takeover need not disrupt the running of the country - despite his declaring a state of emergency with armed soldiers patrolling streets throughout the capital, Suva.

He has encouraged businesses to return to normal life, saying on Monday the initial phase of what he called "this peaceful transition" was almost over.

He has promised to appoint an interim government that will eventually call elections to restore democracy.